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What is 'Deflation' Deflation is a contraction in the supply of circulated money within an economy, and therefore the opposite of inflation. In times of deflation, the purchasing power of currency and wages are higher than they otherwise would have been. This is distinct from but similar to price deflation, which is a general decrease in the price level, though the two terms are often mistaken for each other and used interchangeably. BREAKING DOWN 'Deflation'
Deflation is when prices fall. Here are causes, how it's measured, how it's stopped, and why it's worse than inflation. Japan as an example.